BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
January 16, 2013
Beautiful Brands International (BBI) is portrayed as a modern-day franchise success story in the business and restaurant industry press.
(UnhappyFranchisee.Com) David Rutkauskas, BBI’s founder & CEO, proudly touts his Entrepreneur of the Year award, his “Top 100 People” designation & his claim of 500,000+ Twitter followers, and his 2013 Mercedes-Benz SL550 (base price: $101K)*.
BBI is a virtual press release factory, promoting a constant stream of exciting announcements about the signing of their latest franchise brand, their latest multi-unit franchise development deal, or their newest international master franchisees.
Since UnhappyFranchisee.Com began taking a closer look at the BBI success story, we’ve come to the conclusion that Beautiful Brands’ success is mainly in selling franchises that will never open.
In the past few years, the press has referenced more than 2000 franchises “in development” for BBI-owned brands Camille’s Sidewalk Café (1000+), FreshBerry Frozen Yogurt (1000+), Rex’s Chicken (270+) and Coney Beach (14), yet their current websites collectively list only 74 open locations.
In recent years, BBI has announced the signing of 21 franchise “partner” brands that paid BBI to transform them into national or international franchise chains, yet only 2 appear to have sold and opened franchises.
It appears that more than half of the announced BBI partner brands have terminated their partnerships and separated without having sold a franchise.
One master franchisee is suing David Rutkauskas, Beautiful Brands, and 5 related companies for breach of contract.
Our findings, by brand, are included below.
We have asked David Rutkauskas and BBI for clarification or rebuttal numerous times, but have been ignored.
If you can help us locate the “success” in the BBI success story, please leave a comment below.
* We’re guessing at the make & model. We bloggers don’t shop for Mercedes too often.
Beautiful Brands-Owned Franchise Brands
We’ve found evidence that indicates that the vast majority of the franchises sold by BBI never opened, and more than half of those that did open ended up failing.
Angry franchisees have commented “…this company and its leader desire nothing more than to take the money of people they convince their concept is great…
“We had zero support from day one through the last day… Once you are in trouble they stop taking your calls period…”
“Simply put Dave R should be tried and prisoned for the way he treated us and other franchisees.”
Camille’s Sidewalk Café
In 2010 & 2011, Beautiful Brands International (BBI) stories stated that it had more than 1000 Camille’s Sidewalk Café franchises in development.
While Beautiful Brands may have collected fees for more than 1000 franchises, it doesn’t appear that more than about 100 were ever open at one time.
Of those that opened, more than half failed. According to the SBA, Camille’s has a 58% SBA loan default rate.
As of January, 2013, there are just 30 Camille’s Sidewalk Café franchises listed on its website.
Several Camille’s ex-franchise owners told UnhappyFranchisee.Com they received little-to-no franchise support and felt David Rutkauskas was indifferent to their struggle for survival:
When the ex-franchise owners shared their experiences on UnhappyFranchisee.Com, they were sent legal threats by BBI’s law firm.
In 2010 & 2011, Beautiful Brands International claimed it had more than 1000 FreshBerry franchises “in development.”
While Beautiful Brands may have collected fees for more than 1000 franchises, it doesn’t appear that more than about 42 were ever open at one time.
As of January, 2013, the number of U.S. FreshBerry stores that have closed (13) is on its way to surpassing the number of U.S. stores open (16).
In April, 2010, David Rutkauskas announced the signing of a franchise agreement for the development of 275 Rex’s Chicken franchises in the U.S.
Yet by 2012, there were only 4 Rex’s Chicken locations worldwide.
In January, 2012, the Rex’s Chicken website listed 2 locations… one in Tulsa, OK (in the former Coney Beach space) and one in Raleigh, NC.
When we called the Raleigh Rex’s Chicken, the number was disconnected. It appears to have closed early 2012, though it’s still listed on the website as open.
In 2007, David Rutkauskas and Beautiful Brands sold franchises to a hot dog concept called Coney Beach before they had even established an operating prototype.
In July, 2007, they opened the first Coney Beach in Tulsa. In October, 2007, they announced agreements to expand Coney Beach throughout the Persian Gulf and Florida.
In April, 2010, BBI closed their only Coney Beach and the brand disappeared from BBI’s portfolio.
Read about Coney Beach here:
Beautiful Brands Franchise Partners
In addition to selling its own franchise brands, BBI also sells a franchise development and sales package which it calls a “partnership” program.
BBI “partners” allegedly pay upfront fees of $50K – $100K, plus a percentage of the fees resulting from franchises sold.
Read our post BEAUTIFUL BRANDS Partner Program: Behind the Hype to see which 2 brands seem to have sold and opened franchises through BBI so far, and the status of the other 19.
BBI appears to “bundle” its partner franchise brands with its own brands in order to sell franchise development rights to international master franchisees.
Abu Dhabi-based EABG allegedly paid BBI $500,000 for master franchising rights in the Middle East.
EABG is suing BBI and David Rutkauskas for breach of contract: David Rutkauskas, Beautiful Brands Sued by Master Franchisee
Here are our posts on other BBI “partner” brands:
CherryBerry Yogurt Bar
CherryBerry Self Serve Yogurt Bar, founded and owned by Dallas & Robyn Jones, seems to be the only partner brand selling and opening a significant number of franchises. Nevertheless, we suspect that nearly 10% of all CherryBerry stores closed in 2012 which may signal challenging times to come.
Read more about CherryBerry here:
One of the newest additions to the BBI partner portfolio has a dubious past and scary track record:
Partner Departures & Bizarre Addition of “Affiliate Brands”
After the loss of Smallcakes and Ludgers Cakes, the BBI “Portfolio” pages exploded with dozens of logos. However, many supposed “affiliates have never heard of Beautiful Brands.
Beautiful Brands Press Coverage
Three news outlets in particular (Tulsa World, QSR, & Fast Casual) have reinforced and spread the BBI success story myth by publishing BBI-supplied announcements, numbers and quotes for several years.
UnhappyFranchisee.Com has taken them to task for publishing, in our view, BBI press releases as original, fact-checked content, and we’ve urged them to do follow-up stories on the actual outcomes of the celebrated agreements.
February 19, 2013
April 20, 2013
April 22, 2013
April 30, 2013
May 3, 2013
Beautiful Brands Social Media Representations
Our opinions regarding David Rutkauskas, Beautiful Brands International (BBI), and related entities were formed after many hours combing public documents, news stories, Franchise Disclosure Documents (FDDs), reviewing Internet comments and direct correspondence with former franchisees and BBI brand partners. Still, they should be regarded as opinions and are provided so our readers can do their own investigations and draw their own conclusions. If you agree, disagree or have different take on this subject, we invite you to leave a comment below, or send us an email.
Each time we post we notify David Rutkauskas and BBI and invite corrections, clarifications, statements or rebuttals. So far, we have not received a reply.
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TAGS: Beautiful Brands, BBI, Beautiful Brands International, David Rutkauskas, FreshBerry, CherryBerry, Camille’s Sidewalk Cafe, Smallcakes Cupcakery, franchise scam, franchise fraud